Why Most Professional Services Firms Hit a Growth Ceiling – and How to Break Through

The Guide to Growing Professional Services

Jeremy Rosmarin on the Unique Challenges of Scaling Professional Service Firms

Scaling a professional service business presents distinct challenges often overlooked by generic growth frameworks. Jeremy Rosmarin, who transitioned from scaling a 75-person family office operationally to founding Sidecar Capital Partners, an investment firm focused exclusively on small Canadian service businesses, provides a specialized playbook for founders in this sector. His insights stem from deep operational experience and a recognition that these "people-powered" firms require tailored support often unavailable in the market.

The Core Problem: Why Standard Frameworks Fall Short

Rosmarin argues that advice applicable to tech or manufacturing often misaligns with the realities of professional services. Key differences include:

• Human Capital Intensity: Success hinges on talent and process, making scalability different from product-based businesses.

• Practitioner-to-Orchestrator Transition: Many founders start as elite practitioners and must navigate a difficult personal and professional shift to become business leaders.

• Blurred Lines: The distinction between service delivery, sales, and marketing is often less defined, with practitioners frequently involved in business development and referrals.

• Geographic Expansion Nuances: Expanding requires finding local talent and knowledge, not just managing supply chains.

Three Hidden Constraints Sabotaging Growth

Rosmarin identifies three specific constraints that commonly hinder professional service firms from scaling effectively:

1. The Two Market Balance: Leaders must constantly balance the needs of the client market (delivering high-quality service) with the talent market (attracting, retaining, and compensating experts). Over-indexing on client delight can erode profitability if talent costs consume all margins; conversely, prioritizing profit over talent compensation limits the firm's ability to attract the necessary expertise.

2. The Advice Compensation & Incentive Dilemma: Pricing intangible, heterogeneous advice creates inherent conflicts. Time-based billing struggles in the age of AI where productivity increases dramatically but value delivered remains constant or increases. Commission-based models (like real estate) can incentivize transaction speed over optimal client outcomes. Finding a model that aligns firm incentives with client value is critical but challenging.

3. The Guild Mindset: Founders often prioritize their deep subject matter expertise ("well-earned pride") over objectively solving the client's core problem. This "man with a hammer" syndrome leads firms to apply their specific expertise even when the client's actual need requires a different or multidisciplinary approach.

The Solution: Mindset Shift and Tactical Adaptation

Overcoming these constraints starts with the fundamental shift from working in the business (as a practitioner) to working on the business (as an orchestrator and leader). This involves:

• Systems Thinking: Building technology and processes that make practitioners more productive and valuable within the firm's structure.

• Strategic Pricing: Moving beyond simplistic time-based fees to models that reflect client value, segment offerings, and potentially create recurring revenue streams without conflicts of interest.

• Selling Solutions, Not Services: Bundling services to address client problems comprehensively, often in a multidisciplinary way. This approach leads to higher average revenue per client and employee.

• Productization & Asset-Based Consulting: Creating pre-priced, clearly defined service packages or developing proprietary software tools that embed the firm's expertise, decoupling revenue from time and enhancing scalability.

Funding Readiness for Service Firms

Regarding external capital, Rosmarin emphasizes assessing readiness through three lenses:

1. Need for Capital: Is there a clear, value-creating use for the funds (e.g., managing working capital mismatches common in service firms, funding growth initiatives)?.

2. Value Beyond Capital: Does the potential funding partner bring strategic value, understand the service business model, and align with the founder's vision and control preferences?.

3. Founder Willingness: Does the founder truly want to do what's necessary to scale, understanding the personal and professional transformation required?. Rosmarin stresses there's "no shame in saying no" – the mistake is pursuing scale without commitment.

He advises starting conversations with potential partners early, viewing it as a long-term relationship-building process.

Transcript for Search & Skimming

Below is the complete, searchable text of the interview. You can use the speaker tags to quickly search or skim the conversation for key insights on the three hidden constraints of professional services and the path to capital readiness.

Randell Mauricio: Okay. I've been really looking forward to this conversation because not too long ago, I did not know who Jeremy was. And so Jeremy, my pleasure to meet you. And as our story goes, our introduction, our introductory story goes, is that we, uh, found each other on LinkedIn. Eventually we got talking. You shared me a fantastic resource. That is a guide that you wrote that is called The Guide to Growing Professional Services, which is a plainspoken playbook for founders who wanna, you know, build real scale in services businesses. And so I think it was over the July long weekend, I sat down, I reviewed it and I said, "Wow," I was blown away. And I was so excited to dig deeper with you. So first off, thank you so much for sharing that over. And before we dive in, Jeremy Rosmarin, I'll toss it over to you for a quick intro and I'd love to hear your origin story, how you got to this point.

Jeremy Rosmarin: Great to be here. Thank you so much. So I started in this, uh, more from the operations side, uh, rather than the investment side, which is where I'm today. I was, uh, managing director at a, a family office in Canada. Uh, had the privilege of working with partners is we scaled up the business, uh, to 75 people eventually. Uh, and we, um. Space in 2023 decided that, um, it was time to go start something else. And, uh, it was actually before I, I kicked off UHS Capital Partners, which is what I do today, which maybe we'll speak about a bit later. Um, I wanted to sit down. And take some time to reflect on scaling professional service businesses, which I know is something that you and I really hit it off on. And the result of that reflection was, was the guide that I sent you and the ongoing learning that's come from that.

Randell Mauricio: And I, and I think part and parcel is Cyr Capital Partners. And so please, um, what is the problem you're aiming to solve? Because I think that goes hand in hand.

Jeremy Rosmarin: Cyr Capital Partners solves the problem of the lack of growth, equity, and support that's available for small service businesses in Canada. So I think if you're a tech business that's doing five to $10 million in annual revenue, you'll probably have a long lineup. Uh, folks who are there to support your journey, whether that's through capital or advice or services, really roll up their sleeves and, and help founders or family businesses or people who came into the CEO role, uh, build enduring companies. But what I found, and, uh, as I've done this more and more, what I've, uh, heard from so many business leaders is that if you're running a service business, um, there isn't a lot of support out there. Um, and I know that this is something which is very important to you as well, um, as it is to me. I wanted to be in a position where I could really help these people who I care about deeply reach their goals, uh, by, in some cases partnering with them, um, investing in their companies, um, in many cases providing pure advisory and support services to them, um, and helping them on that journey.

Randell Mauricio: I love that you positioned it that way because you're, you're, you're bang on. This is a, the, the founder is a personality and a persona you and I both care about and what I appreciate. About you and your experience, Jeremy, is you've on both sides of the fences and so you, yes. understand. And so you just answered what was gonna be, my first question is, is why did you create this guide? But let's dig deeper. What's missing? and, and, and, and what's broken within professional services that you wanted to, to so much help the founder to better set them up for success?

Jeremy Rosmarin: Is is we're taking a step back to really contemplate what's different about professional services in the first place, and why is it that there's a different type of support system that folks who are running professional services require compared to just any other type of small business out there. Um, the, the first is that these businesses are people powered to the highest degree. It's human capital, it's processes, its systems coming together. So the act of trying to turn that into something which is worth more than the sum of its parts is different than it is for a manufacturing business or a software business, or even many other types of service businesses that aren't professional services, which is an area where I, I, I do support companies as well, quite actively. Um, so that's the first thing. There is a unique need for professional service businesses that I believe and. I think that you and I would agree on this, it's different. There's something different about it. The second is that a lot of these businesses have a, have a history where the founder is the practitioner, and that's maybe how the business started. And there's this process of transitioning from the practitioner to the manager or the practitioner to the orchestrator, and. That is particularly strong in a professional services context, where you have a lot of founders who were elite level practitioners. Sometimes they find themselves in a situation despite their own best efforts running pretty big companies. Um, so because of those two things, and I would say the third one is the general lack of support that's available for small service businesses in the country, small being anything less than $20 million in top line. Um. It's, there's a, there's a need on the one hand for specific tailored made support for this group 'cause of the unique natures of the business. And then a gap. Um, and that gap stems I think, from a couple of different reasons. But the main one is if someone's in the investing space or if someone's in the advisory space, they often, if they're successful, they wanna go up market, they want to go once they've been successful for smaller businesses. They find it more lucrative over time, um, to go to larger businesses and serve those businesses instead. So the result is that most of the folks, uh. You know, find that when they're in that situation, they want to go out and get support to help build an enduring company. Um, it can be a challenge. It can be a big challenge to find the people who are there to support them. I think that's changing. I think in the last few years that's changed in a massive way. Folks like yourself, um, I know we're, we're both a fan of Greg Alexander and the amazing organization that he's created. Uh, so there's an increasing amount of resources out there, but it's still early.

Randell Mauricio: I love that you positioned it that way because that is a, uh, perspective that I personally, deeply, deeply appreciate. And my mind goes to the book, uh, The E-Myth, and, uh, I imagine you've read that too, but when you use the word technician, that's precisely it is how many founders, uh, so many if not all, can relate to the, the, the origin story of "I got started because I love doing this and I wanted to pro, uh, provide it to the market." And then eventually as your business grows and you, you develop a, a loyal fan base, a a, a clientele base, you hit a ceiling and you say, "Ouch." Now I gotta do all these other things. I gotta worry about finance and payroll. I have to be a good manager, da da da da da. And so anyhow, totally respect what you're, what, what you're, what you're saying there. I know that in our conversations back and forth, I know that you are also mentioned the idea of growth frameworks falling short for professional services. Could you, I, I think you, you were probably touching on this, but if you could elaborate on that, Jeremy, I think that would be, uh, interesting.

Jeremy Rosmarin: When you look at many growth frameworks out there, or at least when I have historically, you see a lot of things that make a lot of sense on paper and in theory, and as a practitioner, as an operator or professional service business, it doesn't take you very long to realize that they make absolutely no sense at all. So for instance. The idea of geographic expansion, which is something that for many types of service businesses, in almost all types of software businesses, a growth playbook will be agnostic to borders in a way that as a professional service business might not always make sense if someone's going to do geographic expansion, but they're selling expertise. Not a product then it's not a question of supply chains and things like that. Sometimes it's a question of can we find the right local person? Do we have enough local knowledge? If we don't, how can we go get it? Should we go acquire an existing local professional service business or should we go try to build it out ourselves? Can we have the talent strategy that's gonna support it? It's a different set of questions. I think that geographic expansion is just one example of many things that you can be talking about sales, you can be talking about marketing, you can be talking about operations. Um, so that is something that comes up quite a bit. I think the other one in a professional service context, and this is to an extent true of all businesses, but I think it's especially true in the professional service space, is the, the line between service and sales and marketing is. Blurry. It's much blurrier than it is in a lot of other businesses. The people who are providing the services, the practitioners themselves are in many cases, expected to go out and find business, for example. Or you might have a greater emphasis on referral based go to market, where the person who is the trusted professional to the client. He's asking for the referral is providing the level of service that makes the person willing to provide a referral. These are all unique attributes in a professional service context, which if someone is serious about growing an enduring company, they can't be left out of their growth playbook.

Randell Mauricio: And, and that's why I think it is important, and I know you mentioned it earlier, to have resources, and I mean, you and I have connected about this before. I mean, the work that I do with founders with professional services, um, uh, firms, is to educate them and help them overcome the very challenges that, that you're mentioning so that there is that cohesion and. If I were to think back to the guide that you had so well written, there were three hidden constraints and I loved how that you, I love how you positioned them. I'd love to ask you to just elaborate quickly on on those three areas. If I recall correctly, there was a two market balance. There was a misalignment with the advice and compensation, and then there's this guild mindset that I. Frankly I was, I was, I was really intrigued by how you positioned that. So why don't I just toss back to you, Jeremy, those three hidden constraints. If you could elaborate for our listeners and viewers.

Jeremy Rosmarin: These are all constraints which. I fell, fell for as someone who was trying to build a business for well over a decade. And when I reflected back on some of the mistakes that I made and some of the successes that my partners and I had navigating them, a lot of them came down to these, these three areas that you just mentioned. So maybe we'll take each of those, uh, one at a time. So Two Market Balance. Um, this is a very. Well established concept and a lot of the literature around professional service business, it goes back to, uh, David Maister's book, which I know is one that you and I spoke about. Um, and. In the guide. I tried to elaborate on that and maybe update it to an extent for, for what's required in 2025. Um, but the two market balance in a nutshell is you have two, two, um, markets. As a leader of a professional service business, you have the market for clients and you have the market for talent. And like we were talking about before, the nature of what professional service businesses do makes these two markets. Um, kind of intention or in, uh, you know, that, that they need to be balanced to an extent. For example, if you're gonna, um. Do exactly what clients want. Providing the highest level of service, providing the greatest professionals, the biggest talent, uh, paying them accordingly. Uh, and that's gonna deliver, you know exactly what the clients want. Um, and you're not willing to compromise on anything else in that business, right? That, that's like your number one thing is just delighting the clients. You can end up in a situation where all of the profit is going to be employees and. Virtually none of it is going to the owners of the business. Um, that's an example of when the two market balance is out of whack. You can also have it the other way where if someone who owns a professional service business is prioritizing profit too much and they're not. Willing to share that economics, um, with the employees, that it can limit the expertise and the talent that you're able to attract into the organization. So that's the two market balance. It's this, this unique dynamic of professional service businesses where those two things need to be nailed.

Randell Mauricio: I, I totally agree, and, uh, I, I remember it wasn't too long ago, many, many years ago when I was, uh, uh, in a different role. In a company that was achieving scale and did achieve scale, I was a firm believer in the, in the statement of "we have two clients, the one that pays us and the one that we pay." And you summarized it very, very succinctly, and you have to balance the two. Yes. Okay, so the second one is A C I D. Right, the Advice Compensation Incentive Dilemma. How do you compensate advice? Is it flat fee? Is it success based? Is it a commission? You know, in all of these cases, you do run into, uh, certain conflicts, certain tensions, um, you know, someone who's, uh, in a professional service context in particular, it's not like a product where you can sell it, have a target gross margin, um, and you have. You have a market price for that thing because there's a certain skew around it. Um, you know, and even for high-end products, um, they are looking at, you know, input costs and targeting gross margins, even if they're not commoditized. Products, advice is a lot different. It's very different than that. Advice is something that's intangible. It's. Heterogeneous every single time. You can't, you can provide the same, um, type of advice, but it's very rare that you're gonna provide the same advice twice. How do you price that? How do you charge for that? What do you do? So that's the second, um, barrier to scaling, which is, and, this challenge. Go ahead. Yeah.

Randell Mauricio: Jeremy, I, I, I love this, um. I, I love this challenge and I'd love for you to elaborate on it because I remember when I was reading your, your, your guide, you had, uh, some really nice examples and I, I, I, if I recall correctly, you, you had pulled one example for a realtor versus say somebody who, who was a, a, a, a lawyer on a retainer fee. Could you draw from two examples just so that we have two real life or semi real life experiences to, to draw from?

Jeremy Rosmarin: Sure. Well, there's one. Very live example today, which is time-based fees in the age of AI, which is becoming much more complicated. So historically, there's a lot of businesses that charge based on time, law firms, certain accounting firms, certain tax specialization, and what happens when there's an introduction of a new technology that dramatically increases the productivity per hour. Should the price go down? Well, the value didn't go down. If anything, the value went up and being able to provide something same day as opposed to the next week is actually more valuable, not less valuable. So that's an example of something where we experienced this tension. You know, time-based fees is one. The, the real estate brokerage example is another one that you mentioned where it's commission based. Um, is the incentive to have the, um. You know, the best price for the seller is the incentive to find the balance between finding the best price, but quick enough that you can actually collect that commission, right? These are all things that people in the industry know 'cause they've lived it. Um, and when you trace it back to why so many professional service businesses struggle, struggle to scale, this is one of the reasons it's not getting this, um, advice compensation done Well.

Randell Mauricio: Yeah. And if I could double click and, and, and double down on a, a nugget that you had just shared is you raised the, the point about technology and AI. What I think I heard you say, and please correct me if I'm wrong, is AI and technologies can be used and leveraged as an enabler for you to do more, sustain, if not improve that level of value without necessarily increasing or decreasing your fees. Did did I get that correctly?

Jeremy Rosmarin: If you have the right pricing model, I think the folks that are really married to the time-based fee. I think this is something we've both seen is it's a big struggle in the age of AI becoming increasingly a struggle. The value of what you're providing is staying the same or increasing. Um, and yet if you're still stuck on the same time-based fee model, your revenue's gonna go down. Um, and that, that's not a great matchup, especially when someone already has a scaled firm and, uh, they need to pay their employees. It's not, uh, it's not like that cost is going away unless they start reducing head count.

Randell Mauricio: A very, a very sobering, very tangible, actionable takeaway is, uh, if you're on, uh, hourly billings, it may be time to evolve. So thank you Jeremy, for letting me elaborate there. I'll, I'll toss back to you for the third constraint I.

Jeremy Rosmarin: The third one is the Guild Mindset. This one is one that I have been as guilty of as anybody in the world. If as someone who is in professional services, it's natural to wanna lean into what you learned and it takes a long time to become, um, a practitioner. You know, you think of. Doctors might be going to school for a decade. Uh, you know, especially if they're specializing you, you think of, um, architects, engineers, there's a lot of well-earned pride in the profession. The challenge is that clients do not particularly care about the intricacies of any given subject matter. They care and they're willing to pay. For their problems to be solved. And one of the observations that I've had, and I fell into this trap myself, is the man with the hammer syndrome, which is to the man with a hammer. Every problem looks like a nail. My hammer, uh, was investment advice and I had to learn that, uh, the nail, uh, was not. Necessarily in line with investment advice. And what we did, and what I think a lot of successful firms do is they scale, is they start to bring in practitioners from other disciplines. We had to bring in people who are experiencing in governance. We had to bring in people who were experienced in, uh, financial administration and CFO services and all of these areas that were uncomfortable to me because I didn't understand them, and I certainly didn't know how to do them. So I had to hire people who were outside of what I knew how to do myself for the first time. Um, but the benefit of that is that when it came to the client problems. We could really solve them. 'Cause now we had multiple disciplines that we were applying to it. So the guild mindset is the trap that many professional service business owners get into, which is prioritizing. The subject matter that they are an expert in as opposed to working backwards from solving the client problems. Um, and maybe if we talk about solutions later on, um, you know, that's one of the things that really needs to be weeded out of many organizations if they're gonna scale up.

Randell Mauricio: Perfect segue, but quick comment. I loved how you positioned, uh, well earned. Pride. I was having this conversation just earlier this week with, with another founder, and we were talking about this, the guild mindset of how do you escape that trap? And, you know, the, the idea I shared is, could it very well be a. That we're all par for course, that because we are professional services in nature, we're naturally going to start in delivering that service because we're experts in it. And eventually we have, but eventually we have to evolve to becoming a better manager, a better owner, and make that distinction and crossover. Otherwise, you will forever be stuck in an artisan. So with that, yes, absolutely. Let's, let's transition into solution. Because you've built this guide, you've built this playbook. What is the solution?

Jeremy Rosmarin: Well, the first solution at a high level is Randell, exactly what you help business leaders with because the one thing, the one mindset shift. That enables a solution to all three of these is to work on the business rather than in the business, is to have that perspective as someone, that mental shift that happens when someone says, "I'm going to grow this business as the orchestrator, as the person who can really, um, be a leader of practitioners rather than a practitioner myself." This is. A massive journey for people having outside support a peer network, um, really as many resources as someone can possibly have to navigate that journey, uh, is, is crucial. 'Cause it's not just a business journey, it's a personal journey. It's an identity that evolves throughout it. And I think that the folks who do that really well, they navigate the personal journey and the professional journey. It helps with all three of these barriers. Maybe I'll speak to each of those. 'Cause I, I, I know you asked about them. It speaks to, uh, the first one of the two market balance really Well. Someone who has that perspective. As someone who is working on the business and thinking in systems, they are going to naturally start to see a trade off and start to balance that trade off better. Right between the market for clients and the market for talent, um, they might start to do all sorts of things that I've seen be incredibly helpful. One of which is, is leaning into technology and systems as a way to make the practitioners who are in the business more productive and more valuable to clients than they would be if they went out on their own. Um. You know, it, it doesn't necessarily matter that someone who is a founder of a professional service business, uh, doesn't use those things in their own life and is able to delight clients. What matters is that they are able to create the structure and the systems around the practitioners who work in their business to make them more productive. And, um, that does relate back to. To working on the business rather than in the business. I would say on it also helps with the advice compensation and incentive dilemma. Um, starting to think about what pricing model, what fee model makes sense for us and our unique business. Does it make sense to start. Segmenting our client base, defining our ICP better finding different service lines and different service offerings within what we do to optimize the pricing, to increase margin, to drive more sustainability and even the duration of that revenue. Um, and to do that in a way that doesn't create a conflict of interest with clients. It doesn't rub them the wrong way. Founders are. Beautifully positioned to navigate that. Many times they're the people who know the clients the best and, uh, really have their finger on the pulse of, um, of what makes sense. Uh, having outside support for that is definitely helpful because it requires analysis. They might require a little bit of an outside perspective, so then the founder who understands the business the best and the clients the best, can go in and. Make the decisions that really matter. And on the third one, uh, which is the guild mindset, it's, it's the founders again, who extricate themselves from being the chief cook and bottle washer and everything in between. Uh, who are thinking about the business as a whole, who are then able to most clearly see. Client problems from the client perspective rather than subject matter intricacies from the practitioner perspective and, um, and bring to bear perhaps more expertise. Perhaps not, maybe it's not more expertise from others types of practitioners, but maybe it's. Tweaking what you do to solve the client problems at a fundamental level. Sometimes it's just digging deeper into your given subject matter expertise by making sure that whatever you're doing is solving the underlying client problem. I find that people who do that naturally expand revenue, whether it's through new accounts or increasing the amount of revenue they that they get per account without necessarily even increasing the pricing, which is very powerful.

Randell Mauricio: This is interesting. There's a couple key themes that I'm, that I'm hearing here is, is how do you find a way where you can. Maintain, if not enhance your value. How do you find a way where you can decouple the founder from delivering the services? How do you find a way where you're moving away from hourly billings and the, the, the thought that crossed my mind is in your guide, there's a section focused on, uh, advice around bundling and packaging and productizing. And that strikes me as a very tech. Yeah. Tactical, but also very strategic way of, of really checking the box on all three. So if, if you could, you're nodding your head, so it sounds like you, you would agree with that.

Jeremy Rosmarin: A hundred percent. I think one unifying theme of folks that get out of the Guild mindset is they sell solutions, not services. What does that mean? So a service is, you know, call it a, a weekly, uh. Call it. Let's say it's a not a professional service. We can take it out of that context for a second. Let's say it's a pest control business, so a service would be like a weekly inspection, but is that a solution? Not really. The client doesn't want an inspection. They want to make sure that the area is bug free. So what a solution might do is it might bundle several services. It might bundle a weekly inspection. It might bundle an annual audit, it might bundle, uh. You know, a, a very short term response to issues when they arise. And then a follow up to make sure that whatever underlying issues those got resolved, um, and offering that as a solution, offering that as a bundled service to, to their clients. And you see this in professional services all the time. It's the folks who, you know, the consulting firms that position, what they do as. A comprehensive solution that maybe includes multiple subject matters, multiple. It's multidisciplinary in many cases, and being able to take that solution, go to a client and say, here's the problem that you expressed to me. We have this bundle of services. That is perfectly geared towards solving that, um, that can help with marketing, sales, service and everything. Uh, ops really all aspects of the business, and we also find is those companies that sell solutions and not services, their average revenue per client is dramatically higher. Their average revenue per employees dramatically higher, their pipeline's more full. It's all the things that people want, but have a hard time. Uh, getting to, you mentioned a couple of other ones as well. Productized services. So having services that are pre priced in many cases that have a clearly defined list of what's included in what's not. Um, one of the examples I gave, which you see more and more is professional service firms having that right on their website and people can procure it. Asynchronously. Um, this isn't necessarily something that all professional services, uh, should embrace, but many of them should. I mean, there's a lot of friction that goes out the window, uh, with that type of thing. And then the third one you mentioned was asset-based consulting, which has a lot to do with, you know. Historically, the world of service and the world of software were two different worlds. And they've converged in so many ways, especially now with AI, but even beforehand, um, and what folks who do with asset-based consulting is they're, they're creating tools, software tools that, um. Provide elements of what they do as professional service businesses, and they sell them, they sell access to them. Clients have their data on their systems. Um, clients are paying them a recurring fee. There's a very comprehensive onboarding in many cases. You often see that these asset-based consulting products become mission critical for their clients. Not only that, but they also become very valuable for the practitioners. The practitioners are using themselves to manage projects, to manage service delivery. Um, so this is, these are all different ways that folks have been able to get out of the guild mindset. Um, think about solving. Client problems from a fundamental perspective and, um, and grow revenue and build enduring businesses along the way.

Randell Mauricio: Great advice, and I know that this is not, uh, I know that this concept is not new, but it's one that a lot of founders. are challenged with and rightly so, because if you perfect this, then you really truly are ready for scale and you really potentially may be ready for some gasoline. And so I'm watching the clock. I feel like I could talk to you for another two hours, Jeremy, 'cause this is all gold. but I wanna respect your time. I want to wanna move to a close with this final topic and that is. Scaling and how do you know when you're ready for that extra pour or extra ounce of gasoline? because it, I mean, let's, let's face it, you look online, you look on YouTube. There's just so many gurus these days and there's a lot of talk about how do I grow, how do I scale, how do I. I exit, how do I pour some, uh, some money into it? And so let's talk about finding a funding partner. When is the right time and how do you know that it's the right timing for you?

Jeremy Rosmarin: So I wanna answer the funding partner part, but before that, can I turn it back over to you and just ask you, as you work with leaders of professional service businesses, how do you assess. When they are ready to scale. And what are the types of things that you've seen? Um, both on the yes, this person is ready side, and also sometimes on the, maybe, maybe they're not, or the business isn't.

Randell Mauricio: Yeah. Two parts I, I'll, I'll answer that really simply. The founder steps away for six months or a year, does the business operate? And secondly, if and when they do that, can the business operate sustainably so that the profits are sustained? And if those two check boxes are not checked off, then the answer is you're not ready. Okay.

Jeremy Rosmarin: It's a big lift for a lot of people. There's a lot that goes into that. Being able to take six to 12 months out.

Randell Mauricio: Absolutely. And you're, you're bang on. And it's, uh, it's a, it's, I don't know if control's the right word, but certainly there's a lot of apprehension, there's a lot of anxiety because there's a lot of what ifs. But un until you do it, you really aren't battle tested.

Jeremy Rosmarin: Yes. Yeah, a hundred percent. So let's say that someone is considering taking on. Capital. Right? So some of the things that we would look for is, first of all, do they have, um, do they have a need for the capital? This is a big one. What are they gonna use it for? How is it gonna create more value in the business? Do they need more working capital? There's a myth out there that service businesses aren't capital intensive. I. I couldn't disagree more from what I've seen because anybody who knows anybody who's had the situation where they're paying their employees every two weeks, but they have receivables outstanding for 45 days 'cause they're getting paid afterwards, knows that there's working capital. That's required to do that. And they know that every time they bring on more clients and every time that they bring on, uh, new employees to serve those clients, that mismatch just grows and grows. So in some cases you can fix that with payment terms. And I wrote another guide to managing working capital and service businesses for folks who wanna, um, we can actually add that if you want in the show notes, um, or anything like that. But we, um. You know, there are things that people can do without raising capital, but sometimes, uh, they do need to raise more capital for that. You know, there's more demand than they can possibly meet With internal funding, we've looked at taking on debt. We don't want to do that. We've looked at funding from operations. It's really not sufficient in order to get there. It makes sense to take on some equity funding. The second big one. I think this is especially important in a professional service context is do we see the value beyond the capital? Is the other person who's coming in going to be a partner who can actually help us scale? Do they understand how we're different? Why we're different, why we win? Um, are they willing to let me as the business leader, if I'm gonna take on a partner, are they still willing to let me run the show? Are they gonna start trying to make all sorts of decisions that I don't agree with. That's one massive thing for many professional service business owners. And I think the third one in terms of, you know, readiness and also fit, um, is a lot of things that we talked about on this call is like, do I actually want to do what's needed in order to scale this company? There is no shame in saying no to that. The only mistake that people make is thinking that they want to and then not being willing to do what's necessary to get there. Um, so being able to see clear mindedly, the inputs, all the things that need to get done in order to get there, and then. An unbelievable willingness to push through and get to the other side. Um, those, those three things I think set people up for capital readiness and also success afterwards.

Randell Mauricio: Just because you can, doesn't mean you should. So I love how you positioned it and uh, I love that you mentioned that it's a two way street because it really is. And so my parting thought in our conversation is. If you're wanting to scale and eventually find a a funding partner, start the conversation early because that two-way conversation needs to start, needs to start as soon as possible because it is a partnership for all the reasons that Jeremy, you had mentioned. And so Jeremy, thank you so much for this conversation. I would dare say let's do a number two in a couple months. Let's do another one of these if you're game and, I. for the listeners. Excellent. For the listeners and viewers, what's the best way to connect with you?

Jeremy Rosmarin: Best way to connect with me is, uh, LinkedIn, so you can look me up. Jeremy Rosmarin on LinkedIn, uh, Cyr Capital Partners website. We have our contact there. Um, and uh, I'd love to hear from anybody out there who's thinking about scaling their professional service business. Even if we're not ready for capital, we can talk about, uh, the articles, some thoughts. I offer a free 45 minute consultation for any small business owner, uh, in the country. It's one of my favorite things to do. Um, it's really my pleasure and we just focus on solving whatever is most salient and important for that person. No pitch, no nothing. So I would love to speak with you and also before we wrap Randell, I just wanna say on behalf of the community of folks who are working, uh, alongside people, uh, who are professional service leaders trying to grow great businesses. I love what you're doing. Uh, I love this initiative. I think it's important, uh, socially it's important for the country. Um, so thank you very much. I appreciate the opportunity to speak with you.

Randell Mauricio: Love that perspective. Thank you so much. And, uh. Wealth of conver wealth of knowledge in this conversation, but I'm not surprised because as I mentioned earlier, you have been on both sides of the fence. Thank you, my friend.

Jeremy Rosmarin: Awesome. Great to see you.